The market slump that's accompanied the coronavirus outbreak in the first quarter of 2020 has slammed all stocks, but Endeavour Mining, Saracen Mineral Holdings, Perseus Mining, Alacer Gold, Pure Gold Mining and Polymetal all enjoyed strong share-price runs over 2019 and into the early part of this year. For many investors, the attraction goes back a lot further: the CEOs who've been long-term helmsmen at these companies have built different, but loyal, supporter bases.
For these investors the past year or so has seen some very significant momentum shifts that have come as stronger bullion prices provided favourable tailwinds.
Endeavour Mining and the CEO Egyptian entrepreneur Naguib Sawaris put in charge when La Mancha took control of Endeavour in 2016, Sebastien de Montessus, have moved into a new strategic phase, "reflecting Endeavour's evolution from a cash consumer to a cash generator", as one analyst has put it. The analyst's firm, which sees Endeavour rapidly scaling back its debt from circa US$530 million to less than $175 million within 24 months at its current rate of surplus cash flow and repayment, has a lofty US$32.74/share valuation on the stock at present - more than double the TSX-listed company's current C$21 share price - and even more impressive US$39.62/sh target for FY22.
With the proposed C$1 billion all-scrip acquisition of Semafo set to take Endeavour past 1 million ounces a year of production and into the top-15 ranks of the world's gold leaders, de Montessus is going to preside over the West Africa consolidator he's wanted Endeavour to be (along with Sawaris), with a pipeline of organic growth options and arguably more firepower to pursue further M&A.
When de Montessus took over from Endeavour founding CEO, Neil Woodyer, in May, 2016, after running La Mancha for four years, Endeavour's share price had already more than doubled to about C$18 since the start of the year.
Its current price gives Endeavour a market value around C$2.3 billion and if the gold price, Semafo merger and promise of strong cash flows and shareholder returns can inflate this to levels some are predicting, Endeavour will be in a position to use its stronger paper for more all-share M&A such as recent (so far unsuccessful) tilt at Centamin and now the Semafo union.
Another West African gold miner on the rise is Perseus Mining.
Company boss Jeff Quartermaine, an accountant who was CFO at Perseus from 2010 to 2013, took over as managing director at the start of 2013 when the company was about a year into ramping up production at its first mine, Edikan, in Ghana. It now also has Sissingué in Cote d'Ivoire and the funded US$265 million Yaouré in Cote d'Ivoire on track for production at the end of this year.
Quartermaine said in Florida earlier this year the company was growing annual production to 500,000oz over the next two years and had the "balance sheet capacity and strong cash flows to fund our growth and a future dividend stream".
Perseus now has a market capitalisation of about A$1.07 billion. Its share price, having got to $1.30 last year, is now about 90c but has still doubled in the past 12 months.
Two other ‘sons of the west' are Saracen Mineral Holdings' chief, Raleigh Finlayson, and Pure Gold Mining's Darin Labrenz; the former the Western Australian who went from being mine manager at one of Saracen's sites to steering what is now a A$4.15 billion company (it's gone from 45c to $3.76 in the past five years, having hit $4.66 last year), and Labrenz overseeing Pure Gold's rise to producer in the Red Lake district in Ontario's west, a journey that has so far seen its share price rise sixfold in the past five years.
Pure Gold is also funded to bring its planned C$95 million stage-one mine into production this year.
Saracen bought half of Western Australia's iconic Kalgoorlie Super Pit last year and has guided for FY2020 output of more than 500,000oz. The Super Pit deal, according to Finlayson, "catapults Saracen into the next league of gold miners [with] more production and cash flow … [and] more mine life: plus-10 years based on 7Moz of reserves".
Rod Antal, CEO at Alacer Gold since August 2013 and also previously the company's CFO, has taken Alacer to a C$1.43 billion market cap with its shares rising from C$2.14 two years ago to about $4.85 now (having got to $7.66 last November).
The 80%-owned Çopler gold mine in Turkey has been a serial over-performer under Antal and his management team, and at 350,000-400,000ozpa and with a long life ahead of it, gives the company a platform for growth inside and outside Turkey.
And Vitaly Nesis, CEO at US$7.7 billion Russian gold miner Polymetal for nearly a decade, has the goal of doubling the company's output (from 950,000oz in 2012 to 1.85Moz by 2023) in his sights, having reported output of 1.6Moz at AISC of US$866/oz last year.
The company is in the middle of a US$1.98 billion capex programme - with this year the peak spending year in the cycle - to achieve its new shape, with Nesis meanwhile having more than doubled Polymetal's share price since the end of 2018.
Using the expanding free cash flows from high-margin, increased gold output to pay down a high debt load and maintain Polymetal's impressive return rate are among the challenges ahead for Nesis. With gold prices around current levels, he probably won't be in a hurry to hand over the leadership reins anytime soon.
Nominees for the Mining Journal 2020 CEO of the Year are:
- Sébastien de Montessus, Endeavour Mining
- Darin Labrenz, Pure Gold
- Raleigh Finlayson, Saracen Mineral Holdings
- Jeff Quartermaine, Perseus Mining
- Rod Antal, Alacer Gold
- Vitaly Nesis, Polymetal
- Elizabeth Gaines, FMG
- Mark Cutifani, Anglo American
